Starbucks takes hit as 2020 profit growth seen to be lower than expected
Starbucks fell on the markets today after it warned that 2020 profit growth will come in under its current 10 per cent.
Shares in the company dipped two per cent on the news.
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The announcement was made by finance chief Patrick Grismer, speaking at a conference hosted by Goldman Sachs. He said that adjusted earnings growth would fall below its long-term 10 per cent target next year.
It came as a shock to the market, after Grismer last year promised that an agreement with Nestle would help the firm reach 13 per cent growth in 2020 and 2021, CNBC reported at the time.
However it model for operating growth is still in one piece, the finance chief said.
The company will have to reckon with the benefits of a tax cut, which had boosted Starbucks in 2019, not being taken into next year.
The tax benefit could be a “significant headwind” to growing profit in 2020, Grismer said.
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He also said the company would be buying back $2bn worth of shares this year, rather than next, hinting at fewer repurchases in 2020.
In July strong lines in the US and China helped the company reach its best quarterly sales growth in three years.